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Grant Accounting

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Grant Accounting ...

Module III: MCG Budgeting Basics

    Class II: Accounting Grant Accounting

    Grant Accounting (referred to as Sponsored Accounting at MCG)

What is a Grant?

    Grants are awards received from a variety of federal and non-federal sponsors. Grants are usually the funding mechanism utilized when it is anticipated that the sponsor will have no substantial programmatic involvement in carrying out an approved project of activity. These funds are awarded to MCG (or MCGRI) in response to an application, and in return, MCG/MCGRI agrees to perform the work. In doing so, MCG/MCGRI must comply with various fiscal and administrative regulations.

    Some examples of federal sponsors include National Institutes of Health, Department of Health and Human Services, and National Science Foundation. Other non-federal sponsors include American Heart Association, Juvenile Diabetes Foundation, and Muscular Dystrophy Association.

What is a Contract?

    A contract is a legal agreement between a sponsor and MCG (or MCGRI) to perform or provide services or products. These services may be based on a cost-reimbursable agreement, a cost-plus fee, or a set fee-for-service arrangement. Contracts may be executed between MCGRI/MCG and industry sponsors, such as Abbott Laboratories, Roche Pharmaceuticals, and GlaxoSmithKline, or they may be with federal or state entities. Frequently contracts are awarded when the project originates with the sponsor.

What is MCGRI?

MCGRI is the Medical College of Georgia Research Institute, Inc. It is a separately incorporated non-profit organization that was established to support the

    missions of MCG. In fact, MCGRI is almost always the applicant organization for an award. Because MCGRI does not have any employees, it subcontracts with MCG for the performance of the work. Payments are sent to MCGRI and are then forwarded to MCG.*

    *MCGRI retains a portion of the F&A costs paid by sponsors to support its operations and to fund reinvestment programs at the Medical College of Georgia.

What are F&A costs and what are some examples?

F&A costs, short for Facilities and Administrative costs, are costs that are not directly charged to awards. They are incurred for common or joint objectives on

    sponsored projects and are not easily identifiable with a specific project. F&A costs are charged to MCG funds and recovered from sponsors through

    applications of the F&A rate. F&A costs are real costs of institutional support for sponsored program activity and budgets are expected to recover these costs at the maximum allowable rate. The F&A rate will vary according to each agreement. Examples of F&A costs include administrative salaries, membership dues, postage, and office supplies. The list, although not exhaustive, may be found on SPA’s website, under the Sponsored Project Management Tool section, at: http://www.mcg.edu/spa/A21.pdf. Note: F&A costs are sometimes referred to as indirect costs, IDC, and/or Overhead.

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Module III: MCG Budgeting Basics

    Class II: Accounting Grant Accounting

What is the difference between the projects that SPA manages and the ones that Financial Accounting manages?

    Financial Accounting manages non-sponsored agreements, such as MCGHI, PPG, Dental Foundation, Foundation, etc. SPA manages all grants and contracts that are restrictive as to purpose, most of which are research-related. Thus, both SPA and Financial Accounting may manage a project with a project id, but the fund type distinguishes who manages. Barandy Brock should be contacted with any questions concerning those agreements managed by Financial

    Accounting at (706) 721-0012. For projects managed by SPA, please contact the appropriate Sponsored Accountant:

    ? Kerry Cartledge (706) 721-8239

    School of Dentistry, Ob/Gyn, CBGM, SAHS,

    Emergency Medicine, Ophthalmology, Radiology

    ? Jennifer Guy (706) 721-2039

    Psychiatry, GPI, Pediatrics, AHEC, Cancer Center, SOM

    ? Tammy Faircloth (706) 721-6483

    School of Nursing, Physiology, Family Medicine, Surgery,

    Clinical Pharmacy, Research, School of Graduate Studies,

    Admin & Finance, Academic Affairs, President’s Office

    ? Marlo Key (706) 721-0008

    Medicine, OCIS, Vascular Biology

    ? Sabrina McIntosh (706) 721-4449

    IMMAG, Telehealth, Pharmacology, Anesthesiology

    ? Tameka Wright (706) 721-0826

    Pathology, CBA, Bio Chemistry, Neurosurgery, Neurology

Additionally, Tammy Murrell oversees the Effort Reporting System, Cost Sharing, and reviews and approves all Personnel Action Requests for employees

    paid on sponsored projects. She may be reached at (706) 721-0007. Robin Sellers is the Acting Director of Post-Award Services and may be reached at (706)

    721-2837.

How does a Project get established, and what is the life cycle of a sponsored project?

    First, the application is routed to Pre-Award. Pre-Award helps to ensure that all necessary approvals are in place that are required before the research may begin. Once all approvals are in place and the award is made, Sponsored Accounting will set up a Chartfield Combination (CFC) for the project. Sponsored Accounting will email the CFC to the PI and copy all other pertinent personnel or as requested. A Notice of Extramural Funding (commonly referred to as the “Pink Sheet”) will then be issued by Pre-Award. From that point, Sponsored Accounting takes a lead role in the fiscal and administrative management of the

    project until its completion and close-out.

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Module III: MCG Budgeting Basics

    Class II: Accounting Grant Accounting

Are sponsored funds subject to “lapse” or do they roll to the next fiscal year?

    SPA funds do not lapse on June 30 like Departmental accounts. However, the lapsing of funds will vary according to each agreement. Therefore, it is critical to read each agreement for the specific terms and conditions. For example, some agreements have a limit of how much can be carried forward to the next budget period. Moreover, some sponsors require that any funds carried forward have prior approval.

So just exactly who is responsible for the project?

The PI, Department Manager, and Project Coordinators are responsible for submitting proposals for sponsored projects (these proposals must come through

    SPA). Further, the PI, Department Manager, and Project Coordinators are responsible for the technical, administrative, and fiscal management of the project. Of course, practicality means that other staff members must be relied upon for assistance in accomplishing these tasks, but it is the PI that is ultimately responsible for all expenses on his/her sponsored project.

    The Department Chair is responsible for reviewing proposals that are submitted to sponsors. They should review for various issues such as the PI’s eligibility to perform the research and the PI’s time commitments, as well as what space will be available for the proposed project. Once the award has been accepted,

    the Department Chair continues to have responsibilities for the conduct of the project.

    Deans are accountable for all funds administered for their areas as well as the coordination of all programmatic elements within their schools.

    SPA serves at the liaison between MCG and external agencies that provide sponsored program support. SPA consists of a Pre-Award function and a Post-Award function, referred to as Sponsored Accounting. Pre-Award and Sponsored Accounting jointly manage sponsored projects. Specifically, SPA’s Pre-Award office provides information and assistance to faculty and administrators for the development of proposals, submits all electronic proposals to grants.gov, receives the awards on behalf of MCG and MCGRI, requests account numbers, and transmits the appropriate project information to SPA’s Sponsored

    Accounting staff. Pre-Award also serves as the institutional prior approval office for issues requiring sponsor approval once the award has been activated. SPA’s Sponsored Accounting must monitor the expenses on sponsored projects. This includes reviewing expenses for appropriateness. Some expenses must

    be reviewed and approved by Sponsored Accounting before being processed on projects. We handle the processing of cost transfers, manage the Accounts Receivable process which includes invoicing, and we prepare and submit the financial reports to sponsors. Of course, Sponsored Accounting monitors the budget throughout the life of the project as it is awarded by the sponsor. A key function that Sponsored Accounting manages is the Time & Effort system. We coordinate the close-out process when projects have ended. Most importantly, we provide assistance to the campus on the management of grant and contract funds.

And finally, the Vice President for Research has general oversight for policy issues as they pertain to extramurally funded research programs.

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Module III: MCG Budgeting Basics

    Class II: Accounting Grant Accounting

What determines how I can spend the project money?

    The contract or award document should be reviewed for any rules and limitations on expenses. The sponsor’s overall guidelines must be considered as well. Additionally, MCG policies and, if necessary, A-21 (Cost Principles for Educational Institutions that were developed by the Office of Management and Budget) should be reviewed. When in doubt, contact your Sponsored Accountant.

So how do I know if an expense is allowable?

In order to be an allowable expense on a sponsored project, it not only must be to benefit the project, but it also must be:

    ? Reasonable

    ? Allocable

    ? Consistently treated

    ? Conform to any limitations or exclusions as set forth by the sponsor,

    A-21 Cost Principles, and/or MCG’s policies.

    SPA has a Direct Charging Policy that should be reviewed. It may be found on SPA’s website under SPA Policies at: http://www.mcg.edu/policies/7008.html. In addition, SPA developed a Direct Charging Decision Tree to help “demystify” what constitutes an allowable expense on sponsored projects. It may be found under the Sponsored Project Management Tool section: http://www.mcg.edu/spa/forms/direct%20charging%20decision%20tree.pdf. Allowable direct costs include lab animals, laboratory supplies such as chemicals, and salaries and fringes for those working on the project.

    There are special circumstances, however, that allow items to be charged to a project that are normally considered unallowable. Let’s look at office supplies as an example: if the project involves significant surveying or whose principal focus is preparing large reports and books, then office supplies such as paper and envelopes may be permissible. Also, large complex program projects may qualify as an exceptional circumstance since they oftentimes entail assembling and managing teams of investigators from various departments and/or institutions. If you have such an exception, there is a form that is required to be completed and kept on file. This form, called Justification to Charge Normally F&A as Direct Costs, may be found on SPA’s website at:

    http://www.mcg.edu/spa/forms/Justification.rtf. Of course, there are some items that are never allowable on any project, such as alcohol, alumni activities, and entertainment costs.

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Module III: MCG Budgeting Basics

    Class II: Accounting Grant Accounting

What reports will help me in managing my sponsored projects?

    There are a number of tools to help end users manage their sponsored projects. The Peoplesoft reports that should be used on sponsored projects are:

    ? Comprehensive Financial Report

    ? P/G Status Project Life Basis

    ? Open Encumbrance Report

In addition to the reports, there are queries, which are more advanced. Queries provide the same information as the above reports but the data is in an easily-

    manipulated format. You can run queries within Peoplesoft or you may run the queries into an Excel spreadsheet.

Within Peoplesoft, there are various panels for each project that display pertinent project data. Sponsored Accounting conducts a training session on the

    panels monthly and also covers how to run the reports mentioned above. The next training opportunity will be on Monday, December 4, 2006 from 2:50

    until 4:15pm.

What exactly is effort reporting, and why all the fuss?

    The majority of sponsored agreements’ budgets are allocated to compensation for personnel services. Government sponsors expect to pay only for those portions of employee effort that are actually devoted to their projects. The federal government requires us to verify that the charges in our accounting system for compensation on sponsored projects are reasonable and reflect actual work performed. Effort reporting allows us to verify and, as necessary, make corrections to how salaries have been charged. MCG requires that all faculty and all employees paid from sponsored funds certify their effort on a monthly basis.

What is cost sharing?

    Cost sharing is the portion of the total project costs NOT bourne by the sponsoring agency. It is REAL MONEY charged to and PAID from other funding sources. For example, some sponsors require MCG to pay for some of a project. The particular sponsor’s agreements typically require MCG to spend $1 of our own money for every $1 we spend of their money.

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